Two Years After Earthquake, Haiti Lobbies for Investment
The Washington Diplomat / January 2012

By Larry Luxner

PORT-AU-PRINCE — It’s been awhile since Haiti occupied the front pages of newspapers and captured the attention of TV viewers. Two years have gone by since that awful afternoon of Jan. 12, 2010 — when the ground beneath Port-au-Prince suddenly began shaking, and it seemed that it would never stop. The magnitude-7.0 earthquake killed anywhere from 220,000 to 300,000 people (no one knows for sure), made more than a million Haitians homeless, and reduced most of the capital city’s landmarks to rubble.

Since then, hundreds of thousands of people are still jobless and living in makeshift tent cities, though the rubble has largely been cleared and hope is definitely in the air. Port-au-Prince is buzzing with construction activity, and a new president, former Creole pop singer Michel Martelly, has taken charge, adapting as his mantra the slogan “Haiti’s open for business.”

Indeed it is, judging from the 1,000 or so potential investors from 29 countries who crowded into the capital city’s 87-room Karibe Hotel & Convention Center to attend a two-day conference organized by the Inter-American Development Bank.

Highlighting the Nov. 29-30 event was “Sweet Micky” himself, along with IDB President Luís Alberto Moreno and the star attraction: former U.S. President Bill Clinton.

“Much has happened in these past two years,” said Moreno, formerly Colombia’s ambassador to the United States. “There’s always a time when countries find the right stars that begin to align. I will never stop thanking President Clinton for what he did in my country. Twelve years ago, Colombia was considered a failed state. Today, it’s considered one of the most attractive places to invest in Latin America. It happened because of President Clinton’s belief that when people work together and look at what unites them — not what divides them — and when leadership creates the atmosphere for a better tomorrow, countries can prosper and build the dreams of the new generation. That is why we are here today.”

Clinton, a longtime advocate of U.S. assistance for Haiti, is already the United Nations special envoy for Haiti. He also co-chairs — along with Haitian Foreign Minister Laurent Lamothe — the Presidential Advisory Council on Economic Growth and Investment (PACEGI), whose goal is to create 500,000 jobs over the next three years.

“In my relatively long experience dealing with this country in one capacity or another, this government is the first I have dealt with that seems more concerned about getting something done every day than with the continuous political wars that have gone on,” Clinton said, eliciting thunderous applause.

“Everybody on this stage wants prospective investors to make money. We don’t think it’s a bad thing to make a profit. We just want you to make money in a way that helps the Haitians, too,” said the 42nd president. “That’s why the government has taken concrete steps to make doing business here easier. President Martelly has actively sought out investors and business leaders, and he understands that we have to do more to make Haiti more business-friendly.”

Karl Jean Louis, executive director of PACEGI, told The Washington Diplomat that his council will use various mechanisms to promote Haiti’s image and attract foreign investment.

“We’ve been participating in several forums to showcase how the new government is conducting serious reforms that will have a positive impact on Haiti’s business environment,” he said. “We’re also working with the Haitian Diaspora, with the IDB and USAID [U.S. Agency for International Development] and with our own board members, who can tap into their networks of investors to make them aware of the opportunities we’re offering.”

Louis, 43, spent 10 years doing development work in Rwanda, Burundi and other African countries. He said that in January, he plans to host a national dialogue on investment in Port-au-Prince and will later launch a website on doing business in Haiti.

The day before the IDB conference, Clinton, Martelly and Moreno broke ground on the $257 million Caracol Industrial Park along Haiti’s northwest coast — in what represents the largest foreign investment since the earthquake. The 608-acre free zone will be anchored by Sae-A Trading Co. Ltd., a South Korean textile firm that has committed to hiring 20,000 people in the manufacture of garments for export. By so doing, Sae-A — a major supplier to U.S. retailers such as Walmart, Gap and Target — will become the largest private employer in Haiti.

Eventually, said Martelly, the free zone, located 15 miles from the port city of Cap-Haïtien, could provide jobs for 65,000 people, boosting Haiti’s garment workforce by more than 200 percent. Sae-A is pumping $78 million into the project’s initial phase, while the U.S. government is contributing $124 million and the IDB $55 million.

“It’s not a very pleasant time in American politics. The only thing that the two parties and Congress agree on is helping Haiti,” Clinton said, again sparking applause. “The HELP Act and the HOPE Act are working, giving Haiti more access to the American market than any other country.”

Operations at Caracol Industrial Park should begin next March; the Haitian government is hoping to attract other clothing manufacturers that could benefit from U.S. trade preferences for made-in-Haiti apparel, as well as companies that make electronics and furniture. The IDB estimates the project will create more than $500 million in wages and benefits over the next 10 years, boosting the number of jobs in Haiti’s formal private sector by at least 20 percent.

“Jobs are the engine for driving growth, so we must turn the key and start the engine,” Martelly told his audience. “It is critical that the current forms of foreign investment, which are well intended but not always directed to job creation, be replaced with support for projects such as modernizing Haiti’s infrastructure and electricity grid.”

In addition, he said, “certain trade policies as they relate to Haitian goods must be renegotiated. Securing greater access to manufacturing in Haiti will enhance your investment returns. The Haitian people are not looking for handouts, but for jobs that will restore their dignity.”

Tourism is another area being pursued by the Presidential Advisory Council. During the conference, Bethesda-based Marriott International and Digicel, the country’s largest mobile phone operator, announced they would jointly finance construction of Haiti’s first hotel since the earthquake.

The $45 million Port-au-Prince Marriott Hotel will have 173 rooms, about 4,600 square feet of meeting space, a 1,600-square-foot fitness center and other amenities when it opens in 2014.

“Haiti is in great need of quality hotels today, and for the foreseeable future,” said Arne Sorenson, Marriott International’s president and chief operating officer. “We believe we can make a difference in Haiti by injecting capital, creating jobs, and developing the human talent that can help lift this country over time back to its rightful place as one of the top destinations in the Caribbean.”

Digicel is the country’s largest private investor; its Haiti revenues account for more than $400 million of its total annual sales of $4.5 billion, says CEO Denis O’Brien.

“We’ve had a great experience investing in Haiti,” O’Brien told The Diplomat on the sidelines of the IDB conference. “Haiti today is a really great opportunity for foreign investors, especially in light of manufacturing such as apparel, the [information communications technology] arena and in tourism. Haiti has to play to its strengths. It’s not going to get Intel at this stage of its development, but in focused areas, it can be really competitive. For example, Haiti can be a producer of apparel for companies like Walmart.”

In telecom, Haiti has a penetration rate of 65 percent to 70 percent. Nearly all of that is mobile, since the country has only 35,000 fixed lines. Digicel claims around 3.65 million subscribers, or 71 percent of the total, followed by Trilogy International’s Voilá, with 900,000 subscribers, or 18 percent. The remaining 11 percent of the market is split between Haitel and Natcom, which was recently purchased for $59 million by, curiously, the Vietnamese military.

“We took the view that if you build a very big network, people will come,” said O’Brien, a PACEGI member, noting that Digicel entered the Haitian market only four years ago. It already has 1,170 cell towers and has invested half a billion dollars here.

“We’re interested in having customers of all ages. That’s why we’re subsidizing handsets for $7 or $8 to people who’ve never had a handset before,” he said. “These handsets also include an FM radio and a flashlight. And we’re rolling out charging stations to power the phones to make sure there are enough charging facilities.”

Digicel, which has 12 million subscribers in 32 countries, says Haiti is the biggest in number of subscribers and will overtake Jamaica in terms of revenue this year, followed by Trinidad, El Salvador and Panama.

Last year, O’Brien spent more than $18 million of his own personal fortune to rebuild the bright red Iron Market in downtown Port-au-Prince after it was destroyed in a fire and then the earthquake.

“In the weeks after the quake, we were looking for a very symbolic project that would help the local economy. We looked at rebuilding the cathedral. Spiritually, that would have been great, but wouldn’t have done much for the economy. So we decided on the Iron Market, which is the most famous building in Haiti. In 10 months we rebuilt it. We had people working on this 24 hours a day, because we promised to finish it in time for the anniversary.”

Asked why Digicel is investing in the Marriott project, O’Brien said it makes sense.

“The view of the board is that we will invest in non-core businesses here if it’ll make a difference,” he explained. “We believed we need a business hotel in Port-au-Prince, and that if Digicel led the way, it would encourage other foreign investors. My job is to pitch foreign investors to come to Haiti. I hope there are 10, 20, 30 others who will invest in tourism. That’s why we did it.”

Digicel’s chief rival is Voilá, whose parent company, Trilogy International Partners LLC, is the largest U.S. investor in Haiti to date. Trilogy, which operates mobile networks in Bolivia, New Zealand and the Dominican Republic, has been present in Haiti since 1999 but appears to be losing ground to its more aggressive rivals.

Indeed, many of Haiti’s cell phone users spend only $1 or $2 a month on phone calls; some of them are refugees still living in tents who have no money for food or clothing but somehow come up with the cash to keep their phones going. And the rivalry between Digicel and Voilá has led to massive advertising campaigns and brightly colored red and yellow umbrellas that protect shoppers from sun and rain while blanketing the outdoor markets with their respective logos.

“We’ve seen over $1 billion invested in telecom in Haiti over the last eight years,” said Trilogy President and CEO Brad Horwitz. “It accounts for 25 percent of Haiti’s GDP, and between ourselves and my competitor, we pay over 20 percent of the country’s tax revenues. While impressive, those last two statistics are unsustainable. It’s my own view that we need to think of a new paradigm in Haiti where poverty alleviation through job creation and investment really is the top priority.”

Horwitz added: “The poor state of Haiti’s infrastructure today — power, roads, ports and sewage — is the single greatest inhibitor to private sector investment in Haiti. It’s also the area that offers the greatest opportunity for investment.”

Argentine entrepreneur Rolando Gonzalez Bunster, a longtime Clinton friend who is also a member of the Presidential Advisory Council, said tourism will be the key driver of Haiti’s economy.

“To a great degree, people should invest in what makes Haiti most competitive. The amount of work that can be created with tourism is enormous,” he said. “You’ll have to create infrastructure and destinations. Today it’s a lot easier than it used to be.”

During the IDB conference, González, CEO of Basic Energy Ltd., and Gregory Mevs, chief executive of Haiti’s WIN Group, signed a memo of understanding for the construction of a 250-room hotel adjacent to Port-au-Prince’s Toussaint L’Ouverture International Airport. The Hotel des Artistes, with total investment of $38 million, will feature a traditional Haitian arts-and-crafts motif. It’ll be managed by a private company; groundbreaking is planned for December, with completion set for early 2013.

“This hotel will serve many Haitians returning to their country who will transit overnight on their way to the cities where they came from,” said Mevs, noting that 50 of its rooms will be for extended stays.
Marc-Antoine Acra is general director of Industries Acra. His company is among several working to restore the El Rancho Hotel in Petionville. Before the earthquake, it had 150 rooms — the quake took out 50 of them. Acra said it will cost $6 million to $8 million to rebuild El Rancho, not including an additional 50 rooms that weren’t there to begin with.

In addition, a 130-room Best Western is being rebuilt in downtown Petionville, a project that is worth around $20 million. Ironically, the original structure — Haiti’s first new international-brand hotel in a decade — had been inaugurated only a few days before the earthquake.

The venue for the IDB investor conference, the Karibe, finished in February 2008, suffered considerable quake damage but has since been restored. Meanwhile, the world-famous Hotel Montana — which first opened in 1947 and was completely destroyed in the quake — may also be rebuilt.

But tourism investment isn’t limited just to hotels.

“The government is looking at aggressive airport promotion efforts and offering concessions to build regional airports,” said Mevs, whose company is also involved in a planned $200 million expansion of Port-au-Prince’s commercial port. “Tourism is a factor of transportation. Everybody in the Caribbean has beautiful beaches, but Haiti has an added value: culture. Still, you must build access to these beaches and historical monuments. It’s all about logistics.”